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Auditing: Defining the Population when Sampling

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What is the importance of defining the population when performing audit procedures? How would defining the population affect the sample size? How would incorrectly defining the population affect the sampling unit?

Why do auditors find it necessary to use sampling? What are the risks associated with sampling? How might these risks affect the audit conclusion?

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Your tutorial is 67 words plus three references and gives examples of errors in defining populations, how this impacts audit results and how auditors use sampling to reach audit conclusions.

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What is the importance of defining the population when performing audit procedures? How would defining the population affect the sample size? How would incorrectly defining the population affect the sampling unit?

When you define the population, you are deciding which items you wish to reach a conclusion about. For instance, all the checks written in the month of June. If you define the population as checks #4540-4592, and this is the wrong range of checks written in June, you are not going to be able to make conclusions about all the checks in June because all the checks in June were not sampled. Only those checks in the range of $4540-4592 were available to be tested. So, the sample drawn from that range can only assist you in concluding about that range. So, you might THINK you are concluding about checks in June, but since you have not defined your population correctly (discover the proper items that belong in your population), you have a sampling error.

Incorrectly defining the population means that you might also ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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